Gulke: Corn Market Uneasy As Trump Chides Mexico

January 28, 2017 06:00 AM
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Unease unfolded this week over the corn market as President Donald Trump and President Enrique Peña Nieto of Mexico—a major buyer of U.S. corn—sparred over the proposed construction of a border wall, says Jerry Gulke, president of the Gulke Group. At the same time, technical signals suggest corn could face downward price pressure in the weeks ahead.

The Mexican president’s decision to cancel a trip to the White House next week leaves some people in the agriculture community thinking Trump might get into a trade war.

“Did they do this in anticipation of saying, ‘I can pull back from buying anything from you guys for a little while, inflict a little pain on the exports, watch the price go down’?” Gulke asked during a Thursday interview with “Weekend Market Report” host Pam Fretwell from the 2017 Top Producer Seminar in Chicago. “Farmers [might] get nervous and go to Trump and say, ‘What are you doing?’ It’s this cat-and-mouse game that we think Trump can win all of those things, but the market is uncertain.”

Keep in mind American farmers have benefited from trade deals such as NAFTA, Gulke adds.

“We would have never sold that amount of corn to Mexico because part of the NAFTA agreement was they had to buy certain amounts of grain from us,” Gulke points out. “Now if you’re going to renegotiate that, [it] puts another element of concern in there.”

At the same time, U.S. producers have been selling soybeans and corn because prices are a lot higher than they were in December, Gulke says. Trade uncertainty, grain sales by producers and traders, and emerging technical retracements all are feeding a general sense of unease.

“We had some key reversals down at the resistance where we were trying to rise above the July highs. We also ironically, back in July, started the downward trend with a key reversal down,” Gulke says. “In other words, when you took out the previous day’s high and low and closed lower, that also was up against some key levels that we had to sustain this rally, and we couldn’t do it. It’s a little concerning. We [at Gulke Group] made some hedge coverage in anticipation of that, and in reaction to it, just to get some coverage based upon that and the political atmosphere that’s going on out there.”


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Spell Check

Auburn, IN
2/19/2017 08:05 AM

  Hal, what do you care about it and us farmers? You Ca. People's are going to leave the US anyhow, Hillary troll

Menlo Park, CA
1/30/2017 11:42 AM

  Farmers are about to get what they voted for. The guy is just getting warmed up. Wait until he starts up with China. By the way, it took 4 years to negotiate and congress to approve NAFTA. Do you believe he can negotiate a better deal and get it approved in a matter of months? Wouldn't bet your farm on it.

Kearney, NE
1/28/2017 07:46 AM

  I have often wondered how we could have entered into a "trade" agreement that allows for currency manipulation, which is a form of protectionism. For example, there is no equal way to have a "North American" beef industry unless we also have a North American currency. As long as Canada and Mexico can price their products through their vastly less valuable currencies, they will always have an unfair trade advantage over the U.S. It's no wonder that our country always has a massive trade deficit. And our anti farmer "Farm" groups want us to continue this idiocy through TPP and other big Ag business enabling trade agreements. How sad.


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